Double-digit net income and EPS growth driven by wireless and wireline
Returning more than $1.6 billion to shareholders year-to-date
Increasing quarterly dividend 12.5 per cent year-over-year to 36 cents
VANCOUVER, Nov. 8, 2013 /CNW/ - TELUS Corporation's third quarter 2013
revenue increased by 3.6 per cent to $2.87 billion from a year earlier
while earnings before interest, taxes, depreciation and amortization
(EBITDA) increased by 4.6 per cent to $1.04 billion. EBITDA excluding
restructuring and other like costs increased by 5.7 per cent to $1.05
billion. Basic Earnings per share (EPS) rose by 14 per cent to $0.56,
or 18 per cent to $0.58 on an adjusted basis.
The increase in consolidated revenue was generated by five per cent
growth in wireless network revenue and three per cent growth in
wireline revenue. Wireless revenue benefited from continued subscriber
growth, higher average revenue per unit (ARPU) due to increased
smartphone adoption and related increased use of data services.
Wireline revenue growth was driven by a nine per cent increase in data
revenue, generated by ongoing TELUS TV and high-speed Internet
subscriber growth and increasing revenue per customer.
TELUS attracted 115,000 net new customer connections in the quarter,
including 106,000 postpaid wireless customers, 34,000 TV subscribers
and 19,000 high-speed Internet customers. The growth in TELUS' wireless
customer base was supported by an 11 basis point year-over-year decline
in monthly postpaid subscriber churn to just 0.99 per cent - the lowest
level in over six years. This growth was partially offset by the modest
loss of prepaid wireless customers and a continued decline in legacy
wireline services. TELUS' total wireless customer base of 7.8 million
is up over three per cent year-over-year, while the TELUS TV subscriber
base of 776,000 is up 22 per cent and high-speed Internet connections
are up more than five per cent to 1.37 million.
During the third quarter, TELUS returned $941 million to shareholders
including $222 million in dividends and $719 million in share
purchases. For the nine months ended September 2013, the company
returned $1.639 billion to shareholders, including $639 million in
dividend payments and $1.0 billion in share purchases.
Free cash flow of $365 million in the third quarter was down $61
million, largely reflecting increased capital investments to expand the
capacity, speeds and coverage of TELUS' advanced broadband networks, as
well as higher cash income taxes, which mitigated growth in EBITDA.
C$ and in millions, except per share amounts
Three months ended
Operating expenses before depreciation and amortization(1)
EBITDA excluding restructuring and other like costs(1)(2)(3)
Adjusted net income(1)(4)
Basic earnings per share (EPS)(1)
Free cash flow(5)
Total customer connections(6)
Figures for 2012 have been adjusted for retrospective application of
accounting standard IAS 19 Employee benefits (2011).
EBITDA does not have any standardized meaning prescribed by IFRS-IASB.
For definition and explanation, see Section 11.1 in the accompanying
2013 third quarter Management's discussion and analysis (MD&A).
For the third quarter of 2013 and 2012 restructuring and other like
costs were $15 million and $3 million, respectively.
Adjusted net income and Adjusted EPS do not have any standardized
meaning prescribed by IFRS-IASB. These terms are defined in this news
release as excluding (after income taxes): 1) Restructuring and other
like costs; 2) income tax-related adjustments. For further analysis of
the aforementioned items see Section 1.3 in the accompanying 2013 third
Free cash flow does not have any standardized meaning prescribed by
IFRS-IASB. For definition and explanation, see Section 11.1 in the
accompanying 2013 third quarter MD&A.
Sum of wireless subscribers, network access lines, total Internet
subscribers and TELUS TV subscribers (IPTV and satellite TV). Effective
with the second quarter of 2013 and on a prospective basis,
machine-to-machine (M2M) subscriptions have been excluded from all
subscriber-based measures. Cumulative subscribers include an April 1,
2013 opening balance adjustment to remove approximately 76,000 M2M
Darren Entwistle, President and CEO said, "TELUS once again delivered
strong results, underpinned by our strategic investments in advanced
broadband technology and services, coupled with our unwavering focus on
putting customers first and realising operational efficiencies. Our
customers first culture continues to attract new clients as evidenced
by our third quarter addition of 106,000 new postpaid wireless
customers, 34,000 new TV clients, and 19,000 new high-speed Internet
connections. In addition to these strong growth numbers we are also
reporting an industry-leading monthly postpaid wireless subscriber
churn rate of only 0.99 per cent - our lowest since the first quarter
of 2007. Gaining customers and earning their loyalty is critical to our
ongoing success, so we were pleased with the results of the annual CCTS
report on customer complaints issued earlier this week, which saw
complaints by our customers decline significantly for the second year
in a row. While we have more work to do on this front, we are clearly
delivering a differentiated customer service experience and providing
Canadians with a clear reason to choose TELUS.
This excellence in customer service helped TELUS generate record
earnings per share this quarter, with 14 per cent growth. Furthermore,
we continue to produce robust free cash flow that will enable our
organization to further invest in our growth whilst providing superior
investment returns to our valued shareholders."
Mr. Entwistle added "In the first nine months of 2013, we returned
$1.639 billion to our shareholders through our dividend growth and
share purchase programs and today we raised our quarterly dividend by
two cents to 36 cents a quarter, or $1.44 annually, a 12.5 per cent
year-over-year increase. Our consistently strong execution combined
with our balance sheet strength has placed TELUS in a unique position
to successfully complete our unique multi-year shareholder friendly
initiatives. This includes, through 2016, our dividend growth program
targeting semi-annual increases of circa 10 per cent annually and share
purchases totaling up to $2.5 billion."
John Gossling, TELUS Executive Vice-President and CFO said "TELUS'
sustainable cash flow generation combined with our strong balance sheet
enabled our organization to successfully and expeditiously complete our
2013 share purchase program announced in May and expanded in July. In
total, we bought back and cancelled more than 31 million TELUS common
shares for $1 billion, at an average cost of approximately $32 per
share. This reduced shares outstanding by 4.8 per cent and enhanced
both our earnings per share, and the affordability of future dividend
Reflecting year-to-date results, TELUS updated its annual wireless
external revenue guidance to reflect slightly lower than expected
wireless equipment revenue. TELUS now expects external wireless revenue
to be in the range of $6.1 to $6.2 billion from $6.2 to $6.3 billion
previously. External wireline and consolidated revenue guidance remain
unchanged. In addition, the capital expenditure target is being raised
to approximately $2 billion from approximately $1.95 billion
previously. Importantly, our guidance for 2013 EBITDA and EPS remain
unchanged and are being reaffirmed today.
This news release contains statements about financial and operating
performance of TELUS and future events, including with respect to
future dividend increases and normal course issuer bids to 2016 and the
annual 2013 guidance, that are forward-looking. By their nature,
forward-looking statements require the Company to make assumptions and
predictions and are subject to inherent risks and uncertainties. There
is significant risk that the forward-looking statements will not prove
to be accurate. Readers are cautioned not to place undue reliance on
forward-looking statements as a number of factors could cause actual
future performance and events to differ materially from that expressed
in the forward-looking statements. Accordingly, this news release is
subject to the disclaimer and qualified by the assumptions (including
assumptions for 2013 annual guidance, CEO three-year goals to 2013 for EPS and free cash flow growth excluding
spectrum costs, semi-annual dividend increases to 2016, ability to
sustain and complete multi-year share purchase programs to 2016),
qualifications and risk factors referred to in the first, second and
the accompanying third quarter Management's discussion and analysis, in
the 2012 annual report, and in other TELUS public disclosure documents
and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on EDGAR at sec.gov). Except as required by law, TELUS disclaims any intention or
obligation to update or revise forward-looking statements, and reserves
the right to change, at any time at its sole discretion, its current
practice of updating annual targets and guidance.
Wireless network revenues increased by $71 million or 5.2 per cent to
$1.44 billion in the third quarter of 2013, compared to the same period
a year ago, driven by continued subscriber growth and higher ARPU
driven by ongoing smartphone adoption and associated data services.
Data revenue increased by $91 million or 17 per cent to $637 million,
representing 44 per cent of wireless network revenue in the quarter.
Data ARPU increased by $3.21 or 13 per cent to $27.72. These increases
were due to continued strong adoption and usage of smartphones and data
applications as well as higher roaming volumes.
Blended ARPU increased by $1.07 or 1.7 per cent to $62.49 as data ARPU
growth more than offset a 5.8 per cent voice ARPU decline. This is the
twelfth consecutive quarter of year-over-year growth in blended ARPU.
Monthly postpaid subscriber churn declined 11 basis points to 0.99 per
cent, the lowest in over six years, while blended monthly churn was
down by eight basis points to 1.36 per cent. TELUS' industry-low churn
reflects the company's successful Customers First service approach,
investments in retention, and lower churn on smartphones.
Postpaid net additions of 106,000 were partially offset by a modest loss
of 2,000 lower-ARPU prepaid subscribers for net additions of 104,000,
compared to 111,000 a year ago. Total wireless subscribers was up 3.3
per cent from a year ago to 7.8 million, while the proportion of
high-value postpaid subscribers grew to 86 per cent of the base.
Smartphone subscribers now represent 75 per cent of TELUS' postpaid
base, up from 63 per cent a year ago.
Reported wireless EBITDA of $680 million increased by $42 million or 6.6
per cent over last year due to network revenue growth. The wireless
EBITDA margin, based on total network revenue, increased by 60 basis
points to 46.8 per cent. EBITDA excluding restructuring and other like
costs increased by $45 million or seven per cent to $684 million or
47.0 per cent on total network revenue.
Wireless simple cash flow (EBITDA less capital expenditures) increased
by $23 million to $486 million in the quarter due to higher EBITDA.
External wireline revenues increased by $38 million or 3.0 per cent to
$1.31 billion in the third quarter of 2013, when compared with the same
period a year ago. This growth was generated by increased data service
revenue, partially offset by declines in legacy voice revenues.
Data service and equipment revenues increased by $64 million or 8.7 per
cent, due primarily to strong growth in TELUS TV subscribers,
high-speed Internet and enhanced data services, combined with TV and
high-speed Internet ARPU growth, and TELUS Health services.
Total TV additions of 34,000 were lower by 8,000 from the same quarter
last year, while the total TV subscriber base of 776,000 increased by
139,000 or 22 per cent from a year ago.
High-speed Internet net additions of 19,000 were lower by 7,000 from the
same quarter a year ago, while TELUS' high-speed subscriber base of
1.37 million is up 71,000 or 5.4 per cent from a year ago.
Total network access lines declined by 4.8 per cent from a year ago to
3.3 million. Residential lines were down 7.4 per cent over last year,
reflecting ongoing wireless and Internet substitution and competition.
Business lines were down 1.8 per cent over last year, reflecting
ongoing price-based competition in the small and medium business market
and customer adoption of IP services.
Reported wireline EBITDA of $355 million increased by $3 million or 0.8
per cent year over year, reflecting improving Optik TV and Internet
margins helped by subscriber and ARPU growth, as well as ongoing
operating efficiency initiatives. EBITDA excluding restructuring and
other like costs increased by $12 million or 3.4 per cent to $366
Wireline simple cash flow (EBITDA less capital expenditures) decreased
year-over-year by $62 million due to higher capital expenditures to
support business service growth and investments in broadband
infrastructure including connecting more homes and businesses directly
to fibre optic cable.
CORPORATE AND BUSINESS DEVELOPMENTS
TELUS named as a 2013 component of the Dow Jones Sustainability North
TELUS has been named to the Dow Jones Sustainability North America Index
(DJSI North America) for the 13th consecutive year. TELUS is the only
Canadian telecom company and one of three North American telecom
companies to be named to the index. TELUS received a score of 100 per
cent in both Risk and Crisis Management as well as in Corporate
Citizenship and Philanthropy. TELUS also had the best industry score
for Codes of Conduct/Compliance/Corruption and Bribery. The DJSI North
America tracks the performance of the top 20 per cent of the 600
largest Canadian and American companies in the S&P Global Broad Market
Index that lead the field in terms of sustainability.
Dividend Declaration - increased to 36 cents per quarter, up 12.5
percent from a year ago
The TELUS Board of Directors has declared a quarterly dividend increase
of two cents to 36 cents ($0.36) Canadian per share on the issued and
outstanding common shares of the Company payable on January 2, 2014 to
holders of record at the close of business on December 11, 2013. The
new dividend represents a four cent or 12.5 per cent increase from the
$0.32 quarterly dividend paid on January 2, 2013.
This new quarterly dividend is the sixth increase under TELUS' dividend
growth program originally announced in May 2011 and recently extended
through 2016, wherein the company plans to continue with two dividend
increases per year, normally announced in May and November, of circa 10
per cent annually. Notwithstanding this, dividend decisions will
continue to be dependent on earnings and free cash flow and subject to
the Board's assessment and determination of TELUS' financial situation
and outlook on a quarterly basis. There can be no assurance that the
company will maintain its dividend growth program through to 2016.
TELUS (TSX: T, NYSE: TU) is a leading national telecommunications
company in Canada, with $11.3 billion of annual revenue and
13.3 million customer connections, including 7.8 million wireless
subscribers, 3.3 million wireline network access lines, 1.4 million
Internet subscribers and 776,000 TELUS TV customers. Led since 2000 by
President and CEO, Darren Entwistle, TELUS provides a wide range of
communications products and services, including wireless, data,
Internet protocol (IP), voice, television, entertainment and video.
In support of our philosophy to give where we live, TELUS, our team
members and retirees have contributed more than $300 million to
charitable and not-for-profit organizations and volunteered 4.8 million
hours of service to local communities since 2000. Fourteen TELUS
Community Boards lead TELUS' local philanthropic initiatives. TELUS was
honoured to be named the most outstanding philanthropic corporation
globally for 2010 by the Association of Fundraising Professionals,
becoming the first Canadian company to receive this prestigious
For more information about TELUS, please visit telus.com.
Access to Quarterly results information
Interested investors, the media and others may review this quarterly
earnings news release, management's discussion and analysis, quarterly
results slides, audio and transcript of investor webcast call,
supplementary financial information and our full 2012 annual report at telus.com/investors.
Full quarterly earnings release available at: http://www.newswire.ca/en/releases/archive/November2013/08/c5618.html
TELUS' third quarter 2013 conference call is scheduled for November 8, 2013 at 11 a.m. ET and will feature a presentation followed by a question and answer
period with investment analysts. Interested parties can access the
webcast at telus.com/investors. A telephone playback will be available on November 8 until December 7
at 1-855-201-2300. Please use reference number 1052450# and access code
35175. An archive of the webcast will also be available at telus.com/investors and a transcript will be posted on the website within a few business
SOURCE TELUS Corporation